Hong Kong Regulations

MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 39

Control objectives and internal control procedures to be maintained for each registered scheme

(1) Control objectives that comply with subsection (2) must be established for
each registered scheme and be maintained at all times while the scheme is
registered.

(2) For the purposes of subsection (1), the control objectives of a registered
scheme must include (but are not limited to) the following-

   (a)  ensuring that the scheme assets are safeguarded in the interests of
        scheme members;

   (b)  ensuring that the guidelines made by the Authority under section 28 of
        the Ordinance with respect to forbidden investment practices are not
        contravened;

   (c)  ensuring that the limitations and prohibitions imposed under this
        Regulation with respect to the investment of the funds of the scheme
        in restricted investments are complied with;

   (d)  ensuring that the requirements of sections 37(2), 51 and 52 and
        Schedule 1 with respect to permissible investments are complied with
        in relation to the scheme;

   (e)  ensuring that the funds of the scheme and the scheme assets are,
        except as permitted by this Regulation, kept separate from those of
        the participating employers and of the approved trustee of the scheme
        and of the service providers and other persons appointed or engaged
        for the purposes of the scheme.

(3) Internal control measures for achieving the control objectives of each
registered scheme must be established for the scheme and must be maintained
and complied with at all times while the scheme is registered.

(4) Those internal control measures must include procedures for-

   (a)  monitoring investments to ensure that the control objectives referred
        to in subsection (2)(b), (c) and (d) are achieved; and

   (b)  monitoring the assets and liabilities of the scheme to ensure the
        objective referred to in subsection (2)(e) is achieved, so that the
        funds of the scheme and the scheme assets are kept separate from those
        of the participating employers, the trustee and any other persons
        (such as service providers); and

   (c)  ensuring the accuracy of statements, returns and reports required to
        be lodged with the Authority.

(5) The control objectives and internal control measures established and
maintained for the scheme may be amended, and fresh control objectives or
internal control measures may be substituted, as and when necessary.

(6) This section is not required to be complied with during a financial period
of an employer sponsored scheme if-

   (a)  it has no more than 1000 members throughout the immediately preceding
        financial period of the scheme; or

   (b)  is exempted by the Authority under subsection (7).

(7) The Authority may grant an exemption for the purposes of subsection (6) if
satisfied that-

   (a)  for a substantial portion of the immediately preceding
        financial period of the scheme, the scheme had no more than 1000
        members; or

   (b)  the scheme will not have, or is unlikely to have, more than 1000
        members during the current financial period of the scheme.